Registration No. 333-
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As filed with the Securities and Exchange Commission on April 27, 2001
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
EasyLink Services Corporation
(Exact name of registrant as specified in its charter)
DELAWARE 13-3780773
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
399 Thornall Street
Edison, NJ 08837
(732) 906-2000
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
David W. Ambrosia, Esq.
Executive Vice President and General Counsel
EasyLink Services Corporation
399 Thornall Street
Edison, NJ 08837
(732) 906-2000
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
Ronald A. Fleming, Jr., Esq.
Pillsbury Winthrop LLP
One Battery Park Plaza
New York, New York 10004
(212) 858-1143
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Approximate date of commencement of proposed sale to the public: From
time to time after the effective date of this registration statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [x]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
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Pursuant to Rule 429(a) of the Securities Act of 1933, as amended, a combined
prospectus is being used in this registration statement, and pursuant to Rule
429(b) of the Securities Act of 1933, as amended, the earlier registration
statements to which the combined prospectus relates are the Company's Form S-3
Registration Statement filed on August 4, 2001 (Registration File No. 333-43060)
and Form S-3 Registration Statement filed on July 11, 2000, as amended on August
2, 2000 (Registration File No. 333-41156).
CALCULATION OF REGISTRATION FEE
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Title of each class Amount to be Proposed maximum Proposed maximum Amount of
of securities to be registered(1) offering price aggregate registration
registered (2) per unit(3) offering price(3) fee(3)
--------------------- -------------- ------------------ ------------------- --------------
Class A Common
Stock, par value 40,034,256 $ 0.635 $ 25,421,752 $6,355
$0.01 per share
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(1) Includes 36,975,512 shares issuable upon conversion of outstanding
senior convertible notes or mandatorily issuable in payment of a
portion of the interest on such notes. The notes are convertible into
Class A common stock, $0.01 par value per share, of EasyLink Services
Corporation at various conversion prices, each of which is subject to
adjustment under certain circumstances. This registration statement
includes such additional shares of Class A common stock as may be
issuable pursuant to such adjustments.
(2) Pursuant to Rule 429 of the General Rules and Regulations under the
Securities Act of 1933, as amended, the prospectus which constitutes
part of this registration statement also relates to the remaining
811,944 shares of common stock registered on Form S-3 (File No.
333-43060) and Form S-3 (File No. 333-41156), which registration
statements are still effective. Filing fees of $240.58 and $1,165.73,
respectively, were previously paid for the registration of those
811,944 shares.
(3) Estimated in accordance with Rule 457(c) under the Securities Act
solely for the purpose of computing the registration fee based upon the
average of the high and low prices of the Class A common stock on April
25,2001, as quoted on the Nasdaq National Market.
The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until this registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
ii
The information in this prospectus is not complete and may be changed. We may
not sell these securities until a registration statement relating to these
securities filed with the Securities and Exchange Commission is effective. This
prospectus is not an offer to sell these securities, and it is not soliciting an
offer to buy these securities in any state where the offer or sale is not
permitted.
Subject to Completion, Dated April 27, 2001
PROSPECTUS
40,846,200 Shares
EasyLink Services Corporation
Class A common stock
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This prospectus relates to the offering of our Class A common stock held by
selling stockholders or issuable upon conversion of or in payment of a portion
of the interest on our outstanding senior convertible notes held by other
selling stockholders. The selling stockholders may sell the shares from time to
time. We will pay certain of the expenses of this offering; however, except with
respect to 185,686 of the shares covered by this prospectus, EasyLink Services
is not responsible for the cost of brokerage commissions and discounts. We will
not receive any proceeds from the sale of shares by the selling stockholders.
The selling stockholders may offer and sell all of the shares in the
over-the-counter market or on one or more exchanges. The selling stockholders
may sell the shares at the then prevailing market price for the shares or in
negotiated transactions.
Our Class A common stock is listed on the Nasdaq National Market under the
symbol "EASY." On April 26, 2001, the closing price of our Class A common stock
on the Nasdaq National Market was $0.72 per share.
This investment involves risk. You should purchase only if you can afford a
complete loss. See "Risk Factors" beginning on page 7.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
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The date of this prospectus is [ ], 2001
TABLE OF CONTENTS
Page
Incorporation of Documents By Reference .......................... 3
Where You Can Get More Information ............................... 4
Cautionary Statements Regarding Forward-Looking Statements ....... 4
Prospectus Summary ............................................... 5
Risk Factors ..................................................... 7
Use of Proceeds .................................................. 25
Description of Capital Stock ..................................... 25
Selling Stockholders ............................................. 29
Plan of Distribution ............................................. 33
Legal Matters .................................................... 34
Experts .......................................................... 34
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You should rely only on the information contained in this prospectus. We have
not authorized anyone to provide you with information different from that
contained in this prospectus. The selling stockholders are offering to sell, and
seeking offers to buy, the Class A common stock only in jurisdictions where
offers and sales are permitted. The information contained in this prospectus is
accurate only as of the date of this prospectus, regardless of the time of
delivery of this prospectus or the date of any sale of the Class A common stock.
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Information contained on our Web sites will not be deemed
to be part of this prospectus.
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INCORPORATION OF DOCUMENTS BY REFERENCE
We furnish our stockholders with annual reports containing audited financial
statements and other appropriate reports. We also file annual, quarterly and
current reports, proxy statements and other information with the Securities and
Exchange Commission. Instead of repeating in this prospectus information that we
have already filed with the Securities and Exchange Commission, rules of the
Securities and Exchange Commission permit us to "incorporate by reference" the
information we file with them. These rules mean that we can disclose important
information to you by referring you to those documents that we have previously
filed with the Securities and Exchange Commission. These documents are
considered to be part of this prospectus. Any documents that we file with the
Securities and Exchange Commission in the future will also be considered to be
part of this prospectus and will automatically update and supersede the
information in this prospectus. We incorporate by reference the documents listed
below and any future filings we make with the Securities and Exchange Commission
under Sections 13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934
until the selling stockholders sell all of the Class A common stock offered by
this prospectus.
o Our Annual Report on Form 10-K for the fiscal year ended December 31,
2000, filed with the Commission on April 2, 2001;
o Our Current Reports on Form 8-K and all amendments thereto on Form 8-K/A
filed with the Commission on August 23, 1999, November 3, 1999, February
11, 2000, March 28, 2000, April 24, 2000, May 26, 2000, January 10,
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2001, January 17, 2001, February 7, 2001, February 8, 2001, February 13,
2001, February 26, 2001, March 9, 2001 and March 26, 2001 and
o Our Definitive Proxy Statement filed on April 27, 2001.
WHERE YOU CAN GET MORE INFORMATION
We have filed a registration statement with the Securities and Exchange
Commission to register the Class A common stock that the selling stockholders
are offering to you. This prospectus is part of that registration statement. As
allowed by the Securities and Exchange Commission's rules, we have not included
in this prospectus all of the information that is included in the registration
statement. At your oral or written request, we will provide to you, without
charge, a copy of the registration statement or any of the exhibits to the
registration statement or any or all of the other information that has been
incorporated by reference in this prospectus but not delivered with this
prospectus. If you want more information, write or call us at:
EasyLink Services Corporation
399 Thornall Street
Edison, NJ 08837
Telephone: (732) 906-2000
Attention: Investor Relations
You may also obtain a copy of any filing we have made with the Securities and
Exchange Commission directly from the Securities and Exchange Commission. You
may either:
o read and copy reports, proxy and information statements or other
information we have filed with the Securities and Exchange Commission at
the Securities and Exchange Commission's public reference room at 450
Fifth Street N.W., Washington, D.C 20549.
o obtain copies of reports, proxy and information statements and other
information that we have filed with the Securities and Exchange
Commission on the Securities and Exchange Commission's Internet web site
at http://www.sec.gov.
You can get more information about the Securities and Exchange Commission's
public reference room by calling the Securities and Exchange Commission at
1-800-SEC-0330.
CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING STATEMENTS
We make forward-looking statements within the "safe harbor" provisions of
the Private Securities Litigation Reform Act of 1995 throughout this prospectus.
These statements relate to our future plans, objectives, expectations and
intentions. These statements may be identified by the use of words such as
"expects," "anticipates," "intends," "believes," "estimates," "plans" and
similar expressions. Our actual results could differ materially from those
discussed in these statements. Factors that could contribute to such differences
include, but are not limited to, those discussed in the "Risk Factors" section
of this prospectus.
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PROSPECTUS SUMMARY
This summary highlights information contained elsewhere or incorporated by
reference in this prospectus. This is not intended to be a complete description
of the matters covered in this prospectus and is subject to and qualified in its
entirety by reference to the more detailed information and financial statements,
including the notes thereto, appearing elsewhere or incorporated by reference in
this prospectus.
Our company
EasyLink Services Corporation, formerly Mail.com, Inc., is a leading global
provider of outsourced messaging services to enterprises and service providers.
EasyLink Services combines the businesses of Mail.com Business Messaging
Services, Swift Telecommunications, Inc. and the Easylink Services business
acquired from AT&T Corp. by Swift Telecommunications. As a result of this
combination, we offer a comprehensive portfolio of messaging services to
thousands of business customers worldwide including the majority of the Fortune
500. By leveraging these relationships, we believe that we are positioned to
grow in both of the major sectors of the messaging services industry.
Through continued expansion of our messaging services lines of business and
selling multiple services to our large customer base, we seek to establish a
position in the emerging managed and hosted e-mail markets while expanding our
already established position in the message delivery services market. Because
the essential communications computer network companies need to do business in
today's 24x7x365 environment is common across all messaging services, Easylink
Services is further positioned to benefit from the scale this business
combination created.
Our services include:
o e-mail and groupware services through which we host and operate on our
premises our customer's e-mail and groupware systems such as Microsoft
Exchange, Novell GroupWise and other Internet e-mail services which allow
users to send and receive their e-mail from any location connected to the
Internet;
o virus protection, unsolicited e-mail or spam control and content filtering
services that protect a customer's e-mail system from messages before they
enter or leave the corporate network;
o message delivery services such as electronic data interchange or "EDI,"
telex, desktop fax, broadcast messaging and production messaging services;
and
o professional services such as managed messaging services support, on-site
messaging applications management, help desk and staff augmentation
services.
We provide services on a managed basis that enable our customers to provide
e-mail and groupware, virus protection, spam control and content filtering and
message delivery services to their customers or employees. We derive revenue
from license fees, monthly per-user fees, per-message charges, per-minute
charges and consulting fees.
Other operations
We previously operated an advertising network business. On October 26, 2000,
we announced our intention to sell this business to focus exclusively on our
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established outsourced messaging business. On March 30, 2001, we completed the
sale of the advertising network business to Net2Phone, Inc. Included in the sale
were our rights to provide e-mail-based advertising and permission marketing
solutions to advertisers, as well as our rights to provide e-mail services
directly to consumers at the www.mail.com Web site and in partnership with other
Web sites.
In March 2000, we formed WORLD.com, Inc. to develop the Company's
portfolio of domain names into independent Web properties, and subsequently
acquired or formed its subsidiaries Asia.com, Inc. and India.com, Inc. in which
WORLD.com is the majority owner. In November 2000, the Company announced its
intention to sell all assets not related to its core outsourced messaging
business, including Asia.com, Inc., India.com, Inc. and its portfolio of domain
names.
We are a Delaware corporation. Our principal executive offices are located
at 399 Thornall Street, Edison, NJ 08837. Our phone number is (732) 906-2000.
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RISK FACTORS
Before you invest in our Class A common stock, you should carefully
consider the risks described below and the other information included or
incorporated by reference in this prospectus.
We have only a limited operating history, we are involved in a new and unproven
industry and we have determined to focus on our core outsourced messaging
business.
We have only a limited operating history upon which you can evaluate our
business and our prospects. We have offered a commercial email service since
November 1996 under the name iName. We changed our company name to Mail.com,
Inc. in January 1999. In February 2000, we acquired NetMoves Corporation, a
provider of a variety of Internet message delivery services to businesses. In
March 2000, we formed WORLD.com to develop and operate our domain name
properties as independent Web sites. In the fourth quarter of 2000, we announced
our intention to focus exclusively on our outsourced messaging business and to
sell all assets not related to this business. In February 2001, we acquired
Swift Telecommunications, Inc. which had contemporaneously acquired the EasyLink
Services business from AT&T Corp. The EasyLink Services business is a provider
of outsourced e-mail services and of message delivery services such as
electronic data interchange or EDI, fax and telex services. Swift is a provider
of telex services. On March 30, 2001, we announced that we had sold our
advertising network business to Net2Phone, Inc. Our success will depend in part
upon our ability to maintain or expand our sales of message delivery services
such as EDI and fax services to enterprises, the the development of a viable
market for fee-based e-mail and groupware services on an outsourced basis, our
ability to compete successfully in those markets and our ability to successfully
sell our non-core assets on favorable terms. For the reasons discussed in more
detail below, there are substantial obstacles to our achieving and sustaining
profitability.
We have incurred losses since inception and expect to incur substantial losses
in the future.
We have generated only limited revenues to date. We have not achieved
profitability in any period, and we may not be able to achieve or sustain
profitability. We incurred a net loss attributable to common stockholders of
$85.8 million for the fourth quarter of 2000 and $229.5 million for the year
ended December 31, 2000. We had an accumulated deficit of $307.2 million as of
December 31, 2000. We expect to continue to incur substantial net losses and
negative operating cash flow for the foreseeable future. We intend to expand our
sales and marketing operations, upgrade and enhance our technology, continue our
international expansion, and improve and expand our management information and
other internal systems. We intend to continue to make strategic acquisitions and
investments, which may result in significant amortization of goodwill and other
expenses. We are making these expenditures in anticipation of higher revenues,
but there will be a delay in realizing higher revenues even if we are
successful. If we do not succeed in substantially increasing our revenues or
integrating the EasyLink Services and Swift businesses with our historical
business, our losses will continue indefinitely and will increase.
If we are unable to raise necessary capital in the future, we may be unable to
fund necessary expenditures.
We anticipate the need to raise additional capital in the future. However,
we may not be able to raise on terms favorable to us, or at all, amounts
necessary to fund our anticipated expenditures or future expansion, develop new
or enhanced services, respond to competitive pressures, promote our brand name
or acquire complementary businesses, technologies or services. Some of our
stockholders have registration rights that could interfere with our ability to
raise needed capital.
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If we raise additional funds by issuing equity securities or debt
convertible into equity securities, stockholders may experience dilution of
their ownership interest. The amount of dilution resulting from issuance of
additional shares of Class A common stock and securities convertible into Class
A common stock and the potential dilution that may result from future issuances
has significantly increased in light of the decline in our stock price.
Moreover, we could issue preferred stock that has rights senior to those of the
Class A common stock. If we raise funds by issuing debt, our lenders may place
limitations on our operations, including our ability to pay dividends.
We intend to sell all of our assets not related to our core outsourced messaging
business but may experience difficulty completing any or all of such sales on
favorable terms or at all.
We recently announced our intention to sell all of our non-core assets,
including our advertising network business, our Asia.com, Inc. and India.com,
Inc. subsidiaries and our portfolio of Internet domain names. On March 30, 2001,
we completed the sale of our advertising network business to Net2Phone. We
cannot assure you that we will be able to sell all or any of our remaining
non-core assets on favorable terms or at all. We also cannot assure you as to
the timing or the terms and conditions of the sale of any of these assets or the
form or amount of consideration (if any) that may be received. The realizable
value of these assets may ultimately prove to be less than the carrying value
currently reflected in our consolidated financial statements. Moreover, if the
sales are not successfully completed, the market price of our common stock may
decline to the extent that the current market price reflects a market assumption
that such sales will be successfully completed. To the extent that we receive
non-cash consideration in any of these sales, we may not be able to liquidate
this consideration or otherwise turn it into cash for a period of time after we
receive it or at all.
We intend to continue to acquire, or make strategic investments in, other
businesses and acquire or license technology and other assets and we may have
difficulty integrating these businesses or generating an acceptable return.
We have completed a number of acquisitions and strategic investments since
our initial public offering. For example, we acquired NetMoves Corporation, a
provider of a variety of message delivery services to businesses, and The
Allegro Group, Inc., a provider of email and email related services, such as
virus blocking and content screening, to businesses. We recently acquired Swift
Telecommunications, Inc. and the EasyLink Services business that it had
contemporaneously acquired from AT&T Corp. We will continue our efforts to
acquire or make strategic investments in businesses and to acquire or license
technology and other assets, and any of these acquisitions may be material to
us. We cannot assure you that acquisition or licensing opportunities will
continue to be available on terms acceptable to us or at all. Such acquisitions
involve risks, including:
o inability to raise the required capital;
o difficulty in assimilating the acquired operations and personnel;
o inability to retain any acquired member or customer accounts;
disruption of our ongoing business;
o the need for additional capital to fund losses of acquired businesses;
o inability to successfully incorporate acquired technology into our
service offerings and maintain uniform standards, controls, procedures
and policies; and
o lack of the necessary experience to enter new markets.
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We may not successfully overcome problems encountered in connection with
potential acquisitions. In addition, an acquisition could materially impair our
operating results by diluting our stockholders' equity, causing us to incur
additional debt or requiring us to amortize acquisition expenses and acquired
assets.
We may be unable to successfully integrate the EasyLink Services business
acquired from AT&T.
On February 23, 2001, we completed the acquisition of Swift
Telecommunications, Inc. which had contemporaneously acquired the EasyLink
Services business of AT&T Corp. The EasyLink Services business acquired from
AT&T provides a variety of messaging services such as e-mail, EDI, fax and telex
services. This business was a division of AT&T and was not a separate
independent operating entity. We hired only a portion of the employees of the
business. The messaging network for this business resides on AT&T's managed
network and is being operated and maintained for EasyLink Services by AT&T
pursuant to a Transition Services Agreement. In addition, AT&T will continue to
provide a variety of business and administrative functions for the business
under the Transition Services Agreement. EasyLink Services plans to migrate off
the AT&T network to the EasyLink Services network and to assume responsibility
for these other functions over the next two years.
We cannot assure you that we will be able to successfully transition the
EasyLink Services network and other operations from AT&T to us, or successfully
integrate them into our operations, in a timely manner or without incurring
substantial unforeseen expense. Even if successfully transitioned and
integrated, we may be unable to operate the business at expense levels that are
ultimately profitable for us. Our inability to successfully transition,
integrate or operate the network and operations of the EasyLink Services
business will result in a material adverse effect on our business, results of
operations and financial condition.
We have incurred significant indebtedness for money borrowed.
As of March 31, 2001, we had approximately $108 million principal amount of
outstanding indebtedness for borrowed money. We may incur substantial additional
indebtedness in the future. The level of our indebtedness, among other things,
could (1) make it difficult for us to make payments on our indebtedness, (2)
make it difficult to obtain any necessary financing in the future for working
capital, capital expenditures, debt service requirements or other purposes, (3)
limit our flexibility in planning for, or reacting to changes in, our business,
and (4) make us more vulnerable in the event of a downturn in our business.
We may be unable to pay debt service on our indebtedness for money borrowed and
other obligations.
We had an operating loss and negative cash flow during the fourth quarter of
2000 and for the year ended December 31, 2000 and expect to incur substantial
losses and negative cash flows for the foreseeable future. In addition, we have
a substantial amount of outstanding accounts payable. Accordingly, cash
generated by our operations would have been insufficient to pay the amount of
interest payable annually on our outstanding indebtedness or to pay our other
obligations. We cannot assure you that we will be able to pay interest and other
amounts due on our outstanding indebtedness, or our other obligations, on the
scheduled dates or at all. If our cash flow and cash balances are inadequate to
meet our obligations, we could face substantial liquidity problems. We cannot
assure you that the proposed sale of our remaining non-core assets will not
negatively impact our cash flow available to service our debt. If we are unable
to generate sufficient cash flow or otherwise obtain funds necessary to make
required payments, or if we otherwise fail to comply with any covenants in our
indebtedness, we would be in default under these obligations, which would permit
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these lenders to accelerate the maturity of the obligations and could cause
defaults under our indebtedness. Any such default could have a material adverse
effect on our business, results of operations and financial condition. We cannot
assure you that we would be able to repay amounts due on our indebtedness if
payment of the indebtedness were accelerated following the occurrence of an
event of default under, or certain other events specified in, the indenture for
the convertible notes, including any deemed sale of all or substantially all of
our assets.
Outsourcing of e-mail and groupware services and message delivery services may
not prove to be viable businesses.
An important part of our business strategy is to leverage our existing
global customer base and global network by continuing to provide the best
message delivery services today and by offering these customers managed e-mail
and other messaging services in the future. The market for managed e-mail,
groupware services and other messaging services such as virus protection, spam
control and content filtering services and professional messaging services is
only beginning to develop. Our success will depend on the continued expansion of
the market for outsourced message delivery services such as EDI and fax services
and the development of viable markets for the outsourcing of managed e-mail and
groupware services, services to protect corporate e-mail systems from viruses,
spam and offensive content and related professional messaging services. Each of
these developments is somewhat speculative.
There are significant obstacles to the development of a sizable market for
messaging services outsourcing. Outsourcing is one of the principal methods by
which we will attempt to reach the size we believe is necessary to be
successful. Security and the reliability of the Internet, however, are likely to
be of concern to enterprises and service providers deciding whether to outsource
their messaging services or to continue to provide it themselves. These concerns
are likely to be particularly strong at larger businesses and service providers,
which are better able to afford the costs of maintaining their own systems.
While we intend to focus exclusively on our outsourced messaging services, we
cannot be sure that we will be able to maintain or expand our business customer
base or that we will be able to sell managed messaging services such as e-mail
and groupware hosting services, virus protection, spam control or content
filtering services or professional services to this customer base. In addition,
the sales cycle for managed messaging services such as hosting services is
lengthy and could delay our ability to generate revenues in the managed
messaging services market. As part of our business strategy, we plan to offer
additional outsourced messaging and other services to existing customers. We
cannot assure you that these customers will purchase these services or will
purchase them at prices that we wish to charge. Furthermore, we may not be able
to generate significant additional revenues by providing our outsourced e-mail
and groupware services to businesses. Standards for pricing in the business
e-mail and groupware services market are not yet well defined and some
businesses and service providers may not be willing to pay the fees we wish to
charge. We cannot assure you that the fees we intend to charge will be
sufficient to offset the related costs of providing these services.
We may fail to meet market expectations because of fluctuations in our quarterly
operating results, which would cause our stock price to decline.
Although we intend to steadily increase our spending and investment to
support our planned growth, our revenues (and some of our costs) will be much
less predictable. This is likely to result in significant fluctuations in our
quarterly results, and to limit the value of quarter-to-quarter comparisons.
Because of our limited operating history, the emerging nature of our industry
and our planned sale of our non-core assets, we anticipate that securities
analysts will have difficulty in accurately forecasting our results. It is
likely that our operating results in some quarters will be below market
expectations. In this event, the price of our Class A common stock is likely to
decline.
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The following are among the factors that could cause significant
fluctuations in our operating results:
o incurrence of other cash and non-cash accounting charges, including
charges resulting from acquisitions or dispositions of assets,
including from the disposition of non-core assets such as our Asia.com
and India.com subsidiaries;
o non-cash charges associated with repriced stock options;
o system outages, delays in obtaining new equipment or problems with
planned upgrades;
o disruption or impairment of the Internet;
o demand for outsourced messaging services;
o attracting and retaining customers and maintaining customer
satisfaction;
o introduction of new or enhanced services by us or our competitors;
o changes in our pricing policy or that of our competitors;
o changes in governmental regulation of the Internet and messaging in
particular; and
o general economic and market conditions.
Other such factors in our non-core businesses include:
o incurrence of additional expenditures without receipt of offsetting
revenues pending the sale of these businesses.
We expect significant stock based compensation charges related to repriced
options.
In light of the decline in our stock price and in an effort to retain our
employee base, on November 14, 2000, the Company offered to certain of its
employees, officers and directors, other than Gerald Gorman, the right to
reprice certain outstanding stock options to an exercise price equal to the
closing price of the Company's Class A common stock on NASDAQ on November 14,
2000. Options to purchase 6,327,986 shares are subject to repricing. The
repriced options vest at the same rate that they would have vested under their
original terms except that shares issuable upon exercise of these options may
not be sold until after November 14, 2001. In March 2000, Financial Accounting
Standards Board ("FASB") issued FASB Interpretation No. 44, "Accounting for
Certain Transactions Involving Stock Compensation, an interpretation of APB
Opinion No. 25" ("Interpretation"). Among other issues, this Interpretation
clarifies (a) the definition of employee for purposes of applying Opinion 25,
(b) the criteria for determining whether a plan qualifies as a non-compensatory
plan, (c) the accounting consequence of various modifications to the terms of a
previously fixed stock option or award, and (d) the accounting for an exchange
of stock compensation awards in a business combination. As a result, under the
Interpretation, stock options repriced after December 15, 1998 are subject to
variable plan accounting treatment. This guidance requires the Company to
re-measure compensation cost for outstanding repriced options each reporting
period based on changes in the market value of the underlying common stock.
Depending upon movements in the market value of the Company's common stock, this
accounting treatment may result in significant non-cash compensation charges in
future periods.
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Several of our competitors have substantially greater resources, longer
operating histories, larger customer bases and broader product offerings.
Our business is, and we believe will continue to be, intensely competitive.
Many of our competitors have greater market presence, engineering and
marketing capabilities, and financial, technological and personnel resources
than those available to us. As a result, they may be able to develop and expand
their communications and network infrastructures more quickly, adapt more
swiftly to new or emerging technologies and changes in customer requirements,
take advantage of acquisition and other opportunities more readily, and devote
greater resources to the marketing and sale of their products and services. In
addition, current and potential competitors have established or may establish
cooperative relationships among themselves or with third parties to increase the
ability of their services to address the needs of our current and prospective
customers. Accordingly, it is possible that new competitors or alliances among
competitors may emerge and rapidly acquire significant market share. In addition
to direct competitors, many of our larger potential customers may seek to
internally fulfill their messaging needs through the deployment of their own on
premises messaging systems.
Some of our competitors provide a variety of business services and products
such as Internet access and other telecommunications services, browser software,
homepage design, Web site hosting and software and hardware solutions in
addition to messaging services. The ability of these competitors to offer a
broader suite of complementary services may give them a considerable advantage
over us.
The level of competition is likely to increase as current competitors
increase the sophistication of their offerings and as new participants enter the
market. In the future, as we expand our service offerings, we expect to
encounter increased competition in the development and delivery of these
services. We may not be able to compete successfully against our current or
future competitors.
Our rapid expansion is straining our existing resources, and if we are not able
to manage our growth effectively, our business and operating results will
suffer.
We have aggressively expanded our operations in anticipation of continued
growth in our business and as a result of our acquisitions. We have also
developed the technology and infrastructure to offer a range of services in the
market for outsourced messaging services. At the same time, we announced our
intention to sell all of our non-core assets, including our advertising network
business, our World.com subsidiaries Asia.com and India.com and our portfolio of
domain names. This expansion and the decision to sell all of our non-core assets
has placed, and we expect it to continue to place, a significant strain on our
managerial, operational and financial resources. If we cannot manage our growth
or the sale of non-core assets effectively, our business, operating results and
financial condition will suffer.
It is difficult to retain key personnel and attract additional qualified
employees in our business and the loss of key personnel and the burden of
attracting additional qualified employees may impede the operation and growth of
our business and cause our revenues to decline.
Our future success depends to a significant extent on the continued service
of our key technical, sales and senior management personnel, but they have no
contractual obligation to remain with us. In particular, our success depends on
the continued service of Gerald Gorman, our Chairman, Thomas Murawski, our Chief
Executive Officer, Brad Schrader, our President, and Debra McClister, our
Executive Vice President and Chief Financial Officer. The loss of the services
of Messrs. Gorman, Murawski or Schrader or of Ms. McClister, or several other
key employees, would impede the operation and growth of our business. The
successful dispostion of our non-core businesses depends on the continued
services of Gary Millin, Chief Executive Officer of World.com.
11
To manage our existing business and handle any future growth, we will have
to attract, retain and motivate additional highly skilled employees. In
particular, we will need to hire and retain qualified salespeople if we are to
meet our sales goals. We will also need to hire and retain additional
experienced and skilled technical personnel in order to meet the increasing
technical demands of our expanding business. Competition for employees in
messaging-related businesses is intense. We have in the past experienced, and
expect to continue to experience, difficulty in hiring and retaining employees
with appropriate qualifications. If we are unable to do so, our management may
not be able to effectively manage our business, exploit opportunities and
respond to competitive challenges.
Our business is heavily dependent on technology, including technology that has
not yet been proven reliable at high traffic levels and technology that we do
not control.
The performance of our computer systems is critical to the quality of
service we are able to provide to our customers. If our services are unavailable
or fail to perform to their satisfaction, they may cease using our service. In
addition, our agreements with several of our customers establish minimum
performance standards. If we fail to meet these standards, our customers could
terminate their relationships with us and assert claims for monetary damages.
We need to upgrade our computer systems to accommodate increases in messaging
traffic and to accommodate increases in the usage of our services, but we may
not be able to do so while maintaining our current level of service, or at all.
We must continue to expand and adapt our computer systems as the number of
customers and the amount of information they wish to transmit increases and as
their requirements change, and as we further develop our messaging services.
Because we have only been providing some of our services such as managed e-mail
and groupware services for a limited time, and because our computer systems for
these services have not been tested at greater capacities, we cannot guarantee
the ability of our computer systems to connect and manage a substantially larger
number of customers or meet the needs of business customers at high transmission
speeds. If we cannot provide the necessary service while maintaining expected
performance, our business would suffer and our ability to generate revenues
through our services would be impaired.
The expansion and adaptation of our computer systems will require
substantial financial, operational and managerial resources. We may not be able
to accurately project the timing of increases in email traffic or other customer
requirements. In addition, the very process of upgrading our computer systems is
likely to cause service disruptions. This is because we will have to take
various elements of the network out of service in order to install some
upgrades.
Our computer systems may fail and interrupt our service.
Our customers have in the past experienced interruptions in our services. We
believe that these interruptions will continue to occur from time to time. These
interruptions are due to hardware failures, unsolicited bulk emails that
overload our system and other computer system failures. In particular, we have
experienced outages and delays in email delivery and access to our email service
related to disk failures, the implementation of changes to our computer system,
insufficient storage capacity and other problems. These failures have resulted
and may continue to result in significant disruptions to our service. Although
we plan to install backup computers and implement procedures to reduce the
impact of future malfunctions in these systems, the presence of these and other
single points of failure in our network increases the risk of service
interruptions. Some aspects of our computer systems are not redundant. These
include our member database system and our email storage system, which stores
12
emails and other data for our members. In addition, substantially all of our
computer and communications systems relating to our email services other than
the systems located and operated by AT&T Corp. under our Transition Services
Agreement with them are currently located in our primary data centers in
Manhattan, Edison, New Jersey and Dayton, Ohio. We currently do not have
alternate sites from which we could conduct these operations in the event of a
disaster. Our computer and communications hardware is vulnerable to damage or
interruption from fire, flood, earthquake, power loss, telecommunications
failure and similar events. Our services would be suspended for a significant
period of time if any of our primary data centers was severely damaged or
destroyed. We might also lose stored emails and other member or customer files,
causing significant member dissatisfaction and possibly giving rise to claims
for monetary damages.
Our services will become less desirable or obsolete if we are unable to keep up
with the rapid changes characteristic of our business.
Our success will depend on our ability to enhance our existing services and
to introduce new services in order to adapt to rapidly changing technologies,
industry standards and customer demands. To compete successfully, we will have
to accurately anticipate changes in business and consumer demand and add new
features to our services very rapidly. We also have to regularly upgrade our
software to ensure that it remains compatible with the wide and changing variety
of Web browsers and other software used by our members and business customers.
We may not be able to integrate the necessary technology into our computer
systems on a timely basis or without degrading the performance of our existing
services. We cannot be sure that, once integrated, new technology will function
as expected. Delays in introducing effective new services could cause existing
and potential customers to forego use of our services and to use instead those
of our competitors.
Our business will suffer if we are unable to provide adequate security for our
service, or if our service is impaired by security measures imposed by third
parties.
Security is a critical issue for any outsourced messaging service, and
presents a number of challenges for us.
If we are unable to maintain the security of our service, our reputation and
our ability to attract and retain customers may suffer, and we may be exposed to
liability. Third parties may attempt to breach our security or that of our
customers whose networks we may maintain or for whom we provide services. If
they are successful, they could obtain information that is sensitive or
confidential to a customer or otherwise disrupt a customer's operations or
obtain confidential information, including our customer's profiles, passwords,
financial account information, credit card numbers, stored email or other
personal or business information. Our customers or their employees may assert
claims for money damages for any breach in our security and any breach could
harm our reputation.
Our computers are vulnerable to computer viruses, physical or electronic
break-ins and similar incursions, which could lead to interruptions, delays or
loss of data. We expect to expend significant capital and other resources to
license or create encryption and other technologies to protect against security
breaches or to alleviate problems caused by any breach. Nevertheless, these
measures may prove ineffective. Our failure to prevent security breaches may
expose us to liability and may adversely affect our ability to attract and
retain members and develop our business market.
Security measures taken by others may interfere with the efficient operation
of our service, which may harm our reputation, adversely impact our ability to
attract and retain customers. "Firewalls" and similar network security software
employed by many ISPs, employers and schools can interfere with the operation of
our services.
13
We are dependent on licensed technology.
We license a significant amount of technology from third parties, including
technology related to our managed e-mail and groupware services, virus
protection, spam control and content filtering services, Internet fax services,
billing processes and database. We anticipate that we will need to license
additional technology to remain competitive. We may not be able to license these
technologies on commercially reasonable terms or at all. Third-party licenses
expose us to increased risks, including risks relating to the integration of new
technology, the diversion of resources from the development of our own
proprietary technology, a greater need to generate revenues sufficient to offset
associated license costs, and the possible termination of or failure to renew an
important license by the third-party licensor.
If the Internet and other third-party networks on which we depend to deliver our
services become ineffective as a means of transmitting data, the benefits of our
service may be severely undermined.
Our business depends on the effectiveness of the Internet as a means of
transmitting data. The recent growth in the use of the Internet has caused
frequent interruptions and delays in accessing and transmitting data over the
Internet. Any deterioration in the performance of the Internet as a whole could
undermine the benefits of our services. Therefore, our success depends on
improvements being made to the entire Internet infrastructure to alleviate
overloading and congestion. We also depend on telecommunications network
suppliers such as AT&T Corp., Worldcom, MFS, BBN Planet and UUNET for a variety
of telecommunications and Internet services
Pending the transition of the network and operations for the EasyLink
Services business acquired from AT&T, we are dependent on the services being
provided to us under our Transition Services Agreement with AT&T. See "Risk
Factors - We May Be Unable to Successfully Integrate the EasyLink Services
Business Acquired From AT&T."
Gerald Gorman controls EasyLink Services and will be able to prevent a change of
control.
Gerald Gorman, our Chairman, beneficially owned as of March 31, 2001 Class A
and Class B common stock representing approximately 55% of the voting power of
our outstanding common stock. Each share of Class B common stock entitles the
holder to 10 votes on any matter submitted to the stockholders. As a result of
his share ownership, Mr. Gorman will be able to determine the outcome of all
matters requiring stockholder approval, including the election of directors,
amendment of our charter and approval of significant corporate transactions. Mr.
Gorman will be in a position to prevent a change in control of EasyLink Services
even if the other stockholders were in favor of the transaction.
We have agreed to permit Federal Partners, L.P., a holder of our senior
convertible notes and Class A common stock, to designate one member of our board
of directors. In addition, in connection with the acquisition of Swift
Telecommunications, Inc., we agreed to appoint George Abi Zeid, the former sole
shareholder of Swift, as a director and as our President of International
Operations. In addition, we and Mr. Gorman have agreed to permit our
stockholders who formerly held our preferred stock to designate a total of three
members of our board of directors. Currently, such former holders of our
preferred stock have no designee on our board.
Our charter contains provisions that could deter or make more expensive a
takeover of EasyLink Services. These provisions include the ability to issue
"blank check" preferred stock without stockholder approval.
14
Our goal of building brand identity is likely to be difficult and expensive.
We announced on March 31, 2001 that we have changed our corporate name to
EasyLink Services Corporation to more accurately reflect the strengths,
relationships and solutions that we offer. We believe that a quality brand
identity will be essential if we are to develop our business services market. We
do not have experience with some of the types of marketing that we are currently
using. If our marketing efforts cost more than anticipated or if we cannot
increase our brand awareness, our losses will increase and our ability to
succeed will be seriously impeded.
Our expansion into international markets is subject to significant risks and our
losses may increase and our operating results may suffer if our revenues from
international operations do not exceed the costs of those operations.
We intend to continue to expand into international markets and to expend
significant financial and managerial resources to do so. We have limited
experience in international operations and may not be able to compete
effectively in international markets. If our revenues from international
operations do not exceed the expense of establishing and maintaining these
operations, our losses will increase and our operating results will suffer. We
face significant risks inherent in conducting business internationally, such as:
o uncertain demand in foreign markets for messaging services;
o difficulties and costs of staffing and managing international
operations;
o differing technology standards;
o difficulties in collecting accounts receivable and longer collection
periods;
o economic instability and fluctuations in currency exchange rates and
imposition of currency exchange controls;
o potentially adverse tax consequences;
o regulatory limitations on the activities in which we can engage and
foreign ownership limitations on our ability to hold an interest in
entities through which we wish to conduct business;
o political instability, unexpected changes in regulatory requirements,
and reduced protection for intellectual property rights in some
countries;
o export restrictions, and
o difficulties in enforcing contracts and potentially adverse
consequences.
Regulation of messaging services and Internet use is evolving and may adversely
impact our business.
There are currently few laws or regulations that specifically regulate
activity on the Internet. However, laws and regulations may be adopted in the
future that address issues such as user privacy, pricing, and the
characteristics and quality of products and services. For example, the
Telecommunications Act of 1996 restricts the types of information and content
transmitted over the Internet. Several telecommunications companies have
petitioned the FCC to regulate ISPs and online service providers in a manner
15
similar to long distance telephone carriers and to impose access fees on these
companies. This could increase the cost of transmitting data over the Internet.
Any new laws or regulations relating to the Internet could adversely affect our
business.
Moreover, the extent to which existing laws relating to issues such as
property ownership, pornography, libel and personal privacy are applicable to
the Internet is uncertain. We could face liability for defamation, copyright,
patent or trademark infringement and other claims based on the content of the
email or fax transmitted over our system. We do not and cannot screen all the
content generated and received by our customers. Some foreign governments, such
as Germany, have enforced laws and regulations related to content distributed
over the Internet that are more strict than those currently in place in the
United States. We may be subject to legal proceedings and damage claims if we
are found to have violated laws relating to email content.
We are subject to regulation by various state public service and public
utility commissions and by various international regulatory authorities with
respect to some of our fax services. We are licensed by the FCC as an authorized
telecommunications company and are classified as a "non-dominant interexchange
carrier." Generally, the FCC has chosen not to exercise its statutory power to
closely regulate the charges or practices of non-dominant carriers.
Nevertheless, the FCC acts upon complaints against such carriers for failure to
comply with statutory obligations or with the FCC's rules, regulations and
policies. The FCC also has the power to impose more stringent regulatory
requirements on us and to change its regulatory classification. There can be no
assurance that the FCC will not change its regulatory classification or
otherwise subject us to more burdensome regulatory requirements.
Continued changes in telecommunications regulations may significantly reduce
the cost of domestic and international calls. To the extent that the cost of
domestic and international calls decreases, we will face increased competition
for our fax services which may have a material adverse effect on our business,
financial condition or results in operations.
In connection with the deployment of Internet-capable nodes in countries
throughout the world, we are required to satisfy a variety of foreign regulatory
requirements. We intend to explore and seek to comply with these requirements on
a country-by-country basis as the deployment of Internet-capable fax nodes
continues. There can be no assurance that we will be able to satisfy the
regulatory requirements in each of the countries currently targeted for node
deployment, and the failure to satisfy such requirements may prevent us from
installing Internet-capable fax nodes in such countries. The failure to deploy a
number of such nodes could have a material adverse effect on our business,
operating results and financial condition.
Our fax nodes and our faxLauncher service utilize encryption technology in
connection with the routing of customer documents through the Internet. The
export of such encryption technology is regulated by the United States
government. We have authority for the export of such encryption technology other
than to Cuba, Iran, Iraq, Libya, North Korea, and Rwanda. Nevertheless, there
can be no assurance that such authority will not be revoked or modified at any
time for any particular jurisdiction or in general. In addition, there can be no
assurance that such export controls, either in their current form or as may be
subsequently enacted, will not limit our ability to distribute our services
outside of the United States or electronically. While we take precautions
against unlawful exportation of our software, the global nature of the Internet
makes it virtually impossible to effectively control the distribution of our
services. Moreover, future Federal or state legislation or regulation may
further limit levels of encryption or authentication technology. Any such export
restrictions, the unlawful exportation of our services, or new legislation or
regulation could have a material adverse effect on our business, financial
condition and results of operations.
16
The legal structure and scope of operations of our subsidiaries in some
foreign countries may be subject to restrictions which could result in severe
limits to our ability to conduct business in these countries and this could have
a material adverse effect on our financial position, results of operations and
cash flows. To the extent that we develop or offer messaging services in foreign
countries, we will be subject to the laws and regulations of these countries.
The laws and regulations relating to the Internet in many countries are evolving
and in many cases are unclear as to their application. For example, in India,
the PRC and other countries we may be subject to licensing requirements with
respect to the activities in which we propose to engage and we may also be
subject to foreign ownership limitations or other approval requirements that
preclude our ownership interests or limit our ownership interests to up to 49%
of the entities through which we propose to conduct any regulated activities. If
these limitations apply to our activities, including our activities conducted
through our subsidiaries, our opportunities to generate revenue will be reduced,
our ability to compete successfully in these markets will be adversely affected,
our ability to raise capital in the private and public markets may be adversely
affected and the value of our investments and acquisitions in these markets may
decline. Moreover, to the extent we are limited in our ability to engage in
certain activities or are required to contract for these services from a
licensed or authorized third party, our costs of providing our services will
increase and our ability to generate profits may be adversely affected.
Our intellectual property rights are critical to our success, but may be
difficult to protect.
We regard our copyrights, service marks, trademarks, trade secrets, domain
names and similar intellectual property as critical to our success. We rely on
trademark and copyright law, trade secret protection and confidentiality and/or
license agreements with our employees, members, strategic partners and others to
protect our proprietary rights. Despite our precautions, unauthorized third
parties may improperly obtain and use information that we regard as proprietary.
Third parties may submit false registration data attempting to transfer key
domain names to their control. Our failure to pay annual registration fees for
key domain names may result in the loss of these domains to third parties. Third
parties have challenged our rights to use some of our domain names, and we
expect that they will continue to do so, which may affect the value that we can
derive from the planned disposition of the domain names included among our
non-core assets.
The status of United States patent protection for software products is not
well defined and will evolve as additional patents are granted. If we apply for
a patent in the future, we do not know if our application will be issued with
the scope of the claims we seek, if at all. The laws of some foreign countries
do not protect proprietary rights to the same extent as do the laws of the
United States. Our means of protecting our proprietary rights in the United
States or abroad may not be adequate and competitors may independently develop
similar technology.
Third parties may infringe or misappropriate our copyrights, trademarks and
similar proprietary rights. In addition, other parties have asserted and may in
the future assert infringement claims against us. We cannot be certain that our
services do not infringe issued patents. Because patent applications in the
United States are not publicly disclosed until the patent is issued,
applications may have been filed which relate to our services.
We have been and may continue to be subject to legal proceedings and claims
from time to time in the ordinary course of our business, including claims
related to the use of our domain names and claims of alleged infringement of the
trademarks and other intellectual property rights of third parties. Third
parties have challenged our rights to register and use some of our domain names
based on trademark principles and on the recently enacted Anticybersquatting
Consumer Protection Act. If domain names become more valuable to businesses and
other persons, we expect that third parties will continue to challenge some of
our domain names and that the number of these challenges may increase. In
17
addition, the existing or future laws of some countries, in particular countries
in Europe, may limit or prohibit the use in those countries or elsewhere of some
of our geographic names that contain the names of a city in those countries or
the name of those countries. Intellectual property litigation is expensive and
time-consuming and could divert management's attention away from running our
business. These claims and the potential for such claims may reduce the value
that we can expect to receive from the dispositon of our domain names.
A substantial amount of our common stock may come onto the market in the future,
which could depress our stock price.
Sales of a substantial number of shares of our common stock in the public
market could cause the market price of our Class A common stock to decline. As
of February 28, 2000, we had an aggregate of 80,851,123 shares of Class A and
Class B common stock. On March 20, 2001, we issued an additional 3,000,000
shares of Class A common stock in a capital raising transaction and are
obligated to issue to the purchaser in this financing an additional 1,000,000
shares subject to certain conditions if the closing price of our Class A common
stock has not traded at or above $10 per share for five consecutive days. As of
February 28, 2001, we had options to purchase approximately 13.9 million shares
of Class A common stock outstanding. As of March 31, 2001, we had warrants to
purchase 1,071,233 shares of Class A common stock outstanding. As of March 31,
2000, after giving effect to our recent note exchanges and senior note
issuances, we had approximately 30,798,598 shares of Class A common stock
issuable upon conversion of outstanding senior convertible notes at exercise
prices ranging from $1 per share to $1.75 per share and up to an additional
7,699,649 shares of Class A common stock issuable over five years in payment of
a portion of the interest on such senior notes. In addition, we had 1,271,504
shares of Class A common stock issuable upon conversion of our remaining
outstanding 7% Convertible Subordinated Notes due 2005 at an exercise price of
$18.95 per share. In addition, the holders of Series A Preferred Stock of our
India.com subsidiary have the right during the 60 day period commencing December
31, 2000 to exchange such preferred stock for shares of our Class A common stock
based on the original purchase price of such stock, which in the aggregate was
$14.25 million, divided by the closing price of our Class A common stock around
December 31, 2000. Under the original exchange agreement, the exchange price was
subject to a floor of $4.50. In consideration of a $5 million bridge funding
arrangement provided to us by India.com during the first quarter of 2001, the
exchange price floor was initially reduced to $3.00 and is subject to further
reduction to $1.30 for the percentage of shares of Series A preferred stock
equal to the percentage of the India.com bridge loan drawn down. As of March 31,
2001, 80% of the $5 million bridge loan has been drawn down. If the full amount
of the India.com bridge loan is drawn down, and all of the shares of preferred
stock are exchanged and the closing price of our Class A common stock around
December 31, 2001 is $1.30 per share or less, then we would be obligated to
issue 10,961,538 shares of Class A common stock.
As of February 28, 2001, approximately 53,761,110 shares of Class A common
stock and Class B common stock were freely tradable, in some cases subject to
the volume and manner of sale limitations contained in Rule 144. As of such
date, approximately 27,090,013 shares of Class A common stock will become
available for sale at various later dates upon the expiration of one-year
holding periods or upon the expiration of any other applicable restrictions on
resale. We are likely to issue large amounts of additional Class A common stock,
which may also be sold and which could adversely affect the price of our stock.
As of March 31, 2001, the holders of approximately 25,932,333 shares of
outstanding Class A common stock and the holders of approximately 51,731,289
shares of Class A common stock issuable upon conversion of our outstanding
senior or subordinated convertible notes, issuable in payment of interest over
the next five years on our senior convertible notes, issuable upon exercise of
the exchange right held by holders of India.com preferred stock and issuable
upon exercise of the warrants issued to India.com, had the right, subject to
18
various conditions, to require us to file registration statements covering their
shares, or to include their shares in registration statements that we may file
for ourselves or for other stockholders. By exercising their registration rights
and selling a large number of shares, these holders could cause the price of the
Class A common stock to fall. An undetermined number of these shares have been
sold publicly pursuant to Rule 144.
Our Class A common stock may be subject to delisting from the Nasdaq National
Market.
Our Class A common stock faces potential delisting from the Nasdaq
National Market which could hurt the liquidity of our Class A common stock. We
may be unable to comply with the standards for continued listing on the Nasdaq
National Market. These standards require, among other things, that our Class A
common stock have a minimum bid price of $1 and state that a deficiency shall
exist if such minimum bid price remains below $1 for a period of thirty
consecutive business days. In addition, if our stock price is below $5 per
share, we must maintain minimum net tangible assets of at least $4 million. We
have received a notice from the Nasdaq staff that our Class A common stock has
failed to maintain a minimum bid price of $1 for 30 consecutive trading days. In
accordance with the notice, if the bid price of our stock is at least $1 for a
minimum of 10 consecutive trading days at any time before July 23, 2001, the
Nasdaq staff will determine if we comply with the rule. If we are unable to
demonstrate compliance, the staff will provide us with a de-listing notice. If
we receive a de-listing notice, we will be entitled to appeal the staff's
decision to a Nasdaq Listing Qualifications Panel. In addition, as of December
31, 2000, the company did not have a minimum tangible net assets of $4 million.
If we are unable to demonstrate compliance with the Nasdaq criteria for
maintaining our listing, our Class A common stock could be subject to delisting.
If our common stock were to be delisted from trading on the Nasdaq National
Market and were neither re-listed thereon nor listed for trading on the Nasdaq
Small Cap Market or other recognized securities exchange, trading, if any, in
the common stock may continue to be conducted on the OTC Bulletin Board or in
the non-Nasdaq over-the-counter market. Delisting would result in limited
release of the market price of the common stock and limited news coverage of
EasyLink Services and could restrict investors' interest in our Class A common
stock and materially adversely affect the trading market and prices for our
Class A common stock and our ability to issue additional securities or to secure
additional financing.
Our stock price has been volatile and we expect that it will continue to be
volatile.
Our stock price has been volatile since our initial public offering and we
expect that it will continue to be volatile. As discussed above, our financial
results are difficult to predict and could fluctuate significantly. In addition,
the market prices of securities of Internet-related companies have been highly
volatile. A stock's price is often influenced by rapidly changing perceptions
about the future of the Internet or the results of other Internet or technology
companies, rather than specific developments relating to the issuer of that
particular stock. As a result of volatility in our stock price, a securities
class action may be brought against us. Class-action litigation could result in
substantial costs and divert our management's attention and resources.
We have continuing obligations in connection with the sale of our advertising
network business.
On March 30, 2001, we completed the sale of our advertising network business
to Net2Phone, Inc. Included in the sale were our rights to provide e-mail-based
advertising and permission marketing solutions to advertisers, as well as our
rights to provide e-mail services directly to consumers at the www.mail.com Web
site and in partnership with other Web sites. In connection with the sale, we
entered into a hosting agreement under which we will host or arrange to host the
consumer e-mailboxes for Net2Phone for a minimum of one year. We plan to
transition the hosting of the consumer e-mail boxes to a third party provider in
the near future.
19
A portion of the payments payable to us by Net2Phone under our hosting
agreement with them are conditioned upon the successful transition of the
hosting of the consumer e-mail boxes to the third party provider as well as the
assignment to Net2Phone of our contracts to provide consumer e-mail services for
third party Web sites. We cannot assure you that we will successfully complete
the transition to the third party provider or that the contracts with the third
party Web sites will be successfully assigned to Net2Phone. If we do not satisfy
or we experience delays in these transition and assignment requirements, our
payments under the hosting agreement with Net2Phone will be reduced or delayed.
If we do not successfully transition to the third-party provider, we will
continue to be obligated to host or arrange for the hosting of the consumer
e-mail boxes for Net2Phone. Moreover, even after transition to a third party
provider and assignment of our contracts with third party Web sites to
Net2Phone, we may nonetheless remain liable for our obligations under these
contracts. Accordingly, we may have liability if there is a breach on the part
of the third party to which we transition the hosting or on the part of
Net2Phone under the third party Web site agreements that are assigned to them.
We intend to sell our Asia.com, Inc. and India.com, Inc. subsidiaries and our
portfolio of domain names. Until a sale or other disposition is completed, the
following special risks will continue to apply to these operations:
The limited installed personal computer base and high cost of accessing the
Internet in China and India limits the pool of potential customers for Asia.com
and India.com.
The market penetration rates of personal computers and on-line access in
China and India are far lower than such rates in the United States. Alternate
methods of obtaining access to the Internet, such as through cable television
modems or set-top boxes for televisions, are currently unavailable in India and
China. There can be no assurance that the number or penetration rate of personal
computers in China and India will increase rapidly or at all or that alternate
means of accessing the Internet will develop and become widely available in
China and India.
Our growth is limited by the cost to Chinese and Indian consumers of
obtaining the hardware, software and communications links necessary to connect
to the Internet in China and India. If the overall costs required to access the
Internet do not significantly decrease, most of China's and India's population
will not be able to afford to use our services. The failure of a significant
number of additional Chinese and Indian consumers to obtain affordable access to
the Internet would make it very difficult to execute our business plan.
We believe that wireless access to the Internet through a variety of
hand-held and other devices such as mobile phones will become increasingly
important in Asia. Accordingly, our Asia.com subsidiary has made wireless
Internet services for businesses an important part of its business focus. We
cannot assure you that wireless access to the Internet will in fact develop and
reach wide use and acceptance in Asia as we expect.
We are relying on electronic commerce as a significant part of Asia.com's and
India.com's future revenue, but the Internet has not yet been proven as an
effective commerce medium in China and India.
Asia.com's and India.com's revenue growth depends in part on the increasing
acceptance and use of electronic commerce in China and India. The Internet may
not become a viable commercial marketplace in Asia for various reasons, many of
which are beyond our control, including:
o inexperience with the Internet as a sales and distribution channel;
20
o inadequate development of the necessary infrastructure to facilitate
electronic commerce;
o concerns about security, reliability, cost, ease of deployment,
administration and quality of service associated with conducting
business over the Internet; and
o inexperience with credit card usage or with other means of electronic
payment.
Underdeveloped telecommunications infrastructure and unclear telecommunications
regulations have limited and may continue to limit the growth of the Internet
market in China and India.
The telecommunications infrastructure in China and India is not well
developed. The underdeveloped Internet infrastructure in China and India has
limited the growth of Internet usage there. If the necessary Internet
infrastructure is not developed, or is not developed on a timely basis, future
growth of the Internet in China and India will be limited and our business could
be harmed.
On September 25, 2000, the Chinese government promulgated PRC
Telecommunication Regulations ("Telecom Regulations"). The Telecom Regulations
define two types of telecommunication business, basic telecommunication business
and value-added telecommunication business. The Telecom Regulations also provide
that the State Council will promulgate separate rules to regulate foreign
entities' investment and operation of telecommunication business in China. We
cannot predict the effect of the new laws and regulations to be promulgated by
the State Council in this regard.
Our Asia.com business may be adversely affected by Chinese government regulation
of Internet companies.
China has recently begun to regulate its Internet sector by making
pronouncements or enacting regulations regarding the legality of foreign
investment in the Chinese Internet sector, the existence and enforcement of
content restrictions on the Internet and the availability of securities
offerings by companies operating in the Chinese Internet sector. There are
substantial uncertainties regarding the proper interpretation of current and
future Chinese Internet laws and regulations.
Issues, risks and uncertainties relating to Chinese government regulation of
the Chinese Internet sector include the following:
A prohibition of foreign investment in businesses providing value-added
telecommunication services, including computer information services or
electronic mail box services, may be applied to Internet businesses such as
ours. Some officials of the Chinese Ministry of Information and Industry, or
MII, have taken the position that foreign investment in the Internet sector is
prohibited.
The MII has also stated recently that it intends to adopt new laws or
regulations governing foreign investment in the Chinese Internet sector in the
near future. If these new laws or regulations forbid foreign investment in the
Internet sector, our business in China will be severely impaired.
On September 25, 2000, the Chinese government promulgated Administrative
Measures on Internet Information Services ("Administrative Measures"). The
Administrative Measures require commercial Internet information service
providers to apply for an Internet information service value-added
telecommunication business license from the telecommunication administration
authority to be able to engage in Internet information service businesses and
activities in China. The Administrative Measures also provide that any initial
public offering and listing project or any equity or contractual joint venture
project with foreign investors by a commercial Internet information service
21
provider requires a prior consent from the central information industry
authority. It remains uncertain what percentage will be allowed for foreign
investment in the Internet information service business under existing laws and
regulations. We operate our business in China through our subsidiaries, and are
currently in the process of applying for an Internet information service
value-added telecommunication business license. We cannot predict whether this
application will be successful.
Under the agreement reached in November 1999 between China and the United
States concerning the United States' support of China's entry into the World
Trade Organization, or WTO, foreign investment in Chinese Internet services will
be liberalized to allow for 30% foreign ownership in key telecommunication
services, including Chinese Internet ventures, for the first year after China's
entry into the WTO (subject to certain geographic limitations), 49% in the
second year (with expanded geographic coverage) and 50% thereafter (with no
geographic limitations). The implementation of this agreement is subject to
approval by the U.S. Congress, China's completion of bilateral negotiations with
other WTO members, the multilateral negotiation of China's accession protocol
with the WTO and the completion of China's own domestic procedures for
accession. Within the United States, China's WTO accession faces opposition from
trade unions, environmentalists and human rights organization.
The MII has also stated recently that the activities of Internet content
providers are also subject to regulation by various Chinese government
authorities, depending on the specific activities conducted by the Internet
content provider. Various government authorities have stated publicly that they
are in the process of preparing new laws and regulations that will govern these
activities. The areas of regulation may include online advertising and online
news reporting. In addition, the new laws and regulations may require various
Chinese government approvals for securities offerings by companies engaged in
the Internet sector in China.
The interpretation and application of existing Chinese laws and regulations,
the stated positions of the MII and the possible new laws or regulations have
created substantial uncertainties regarding the legality of existing and future
foreign investments in, and the businesses and activities of, Chinese Internet
businesses, including our Asia.com business.
Accordingly, it is possible that the relevant Chinese authorities could, at
any time, assert that any portion or all of Asia.com's existing or future
ownership structure and businesses violates Chinese laws and regulations. It is
also possible that the new laws or regulations governing the Chinese Internet
sector that may be adopted in the future will prohibit or restrict foreign
investment in, or other aspects of, any of Asia.com's current or proposed
businesses and operations. In addition, these new laws and regulations may be
retroactively applied to Asia.com.
If Asia.com is found to be in violation of any existing or future Chinese
laws or regulations, the relevant Chinese authorities would have broad
discretion in dealing with such a violation, including, without limitation, the
following:
o levying fines;
o revoking our business license;
o requiring us to restructure our ownership structure or operations; and
o requiring us to discontinue any portion or all of our Internet
business.
22
Even if Asia.com complies with Chinese governmental regulations, the Chinese
government may prevent us from distributing, and we may be subject to liability
for, content that it believes is inappropriate.
China has enacted regulations governing Internet access and the distribution
of news and other information. Even if we comply with Chinese governmental
regulations relating to licensing and foreign investment prohibitions, if the
Chinese government takes any action to limit or prohibit the distribution of
information through our network or to limit or regulate any current or future
content or services available to users on our network, our Asia.com business
would be harmed.
Some of our operations are based in India, which presents special regulatory and
other risks to our business.
India has also recently begun to regulate its Internet sector by making
pronouncements or enacting regulations regarding various Internet activities in
India and the legality of foreign investment in the Indian Internet sector.
There are substantial uncertainties regarding the proper interpretation of
current and future Indian Internet laws and regulations. Issues, risks and
uncertainties relating to Indian government regulation of the Indian Internet
sector include risks similar to those in China, in particular with respect to
limitations on foreign investment.
The Indian government is attempting to liberalize this sector and has
enacted or is currently considering enacting new legislation in that regard. For
example, Press Note No. 7 (2000 series) dated July 14, 2000, permits 100%
foreign investment in business-to-business e-commerce companies, subject to the
condition that "such investing companies" divest 26% of their equity in favor of
the Indian public in five years, if "these companies" are listed in other parts
of the world. It remains unclear as to whether the referenced listing is of the
Indian subsidiary or of the investor company. For retail e-commerce companies,
51% foreign equity investment is permitted. Press Note No. 8 (2000 series) dated
August 29, 2000, removes the earlier restriction on automatic approvals in cases
where a foreign investor had a previous or existing joint venture or technology
transfer/trade mark agreements in the same or allied field in India for all
proposals relating to information technology.
In the telecom sector, the present cap on foreign equity is 49% and a
license is required to provide such services. However, the license required for
ISPs has been waived until October 31, 2003. Also, in Press Note No. 9 (2000
series) dated September 8, 2000 the Indian government recently permitted 100%
foreign direct investment in relation to certain activities including:
o ISPs not providing gateways (applicable both for satellite and
submarine cables);
o Infrastructure providers providing dark fiber (IP category 1);
o Electronic mail; and
o Voice mail.
However, the above activities are still subject to the 26% divestment rule,
certain security restrictions and other regulations.
The government has also recently passed the Information Technology Act, 2000
which focuses on recognizing and regulating electronic transactions and records,
affecting:
o authentication of digital records;
23
o legal recognition of electronic records and digital signatures;
o attribution, acknowledgment and dispatch of electronic records;
o secure electronic records and digital signatures; and
o regulation of certifying authorities.
More legislation that is presently being discussed is a draft Information
Communication and Entertainment Bill, 2000 ("ICE Bill") that would govern the
rapid convergence of broadcasting, telecommunications and information
technologies. The ICE Bill contemplates the establishment of a Communication
Commission to license and regulate the provision of network facilities, network
services, application services or content application services and ownership of
wireless apparatus.
It is unclear how the ICE Bill, if enacted, or any of the legislation
previously discussed, will affect India.com's business and operations. Further,
political instability could halt or delay the liberalization of the Indian
economy and adversely affect business and economic conditions in India generally
and our business in particular. Although during the past decade, the government
of India has pursued policies of economic liberalization, including
significantly relaxing restrictions on the private sector and further reforms
are still expected under the current policy to promote the information
technology and software industries, political uncertainty still exists and a
significant change in India's economic liberalization and deregulation policies
could adversely affect business and economic conditions in India generally and
our India.com business in particular. Our Asia.com and India.com properties
developed by WORLD.com compete with the major business and consumer portals and
other providers of Internet services in the markets in which they operate.
USE OF PROCEEDS
The selling stockholders will receive all of the proceeds from the sale of
our Class A common stock under this prospectus. We will not receive any proceeds
from these sales.
DESCRIPTION OF CAPITAL STOCK
The following descriptions of our capital stock and the relevant provisions
of our amended and restated certificate of incorporation, as amended, and bylaws
are summaries and are qualified by reference to our amended and restated
certificate of incorporation, as amended, and our bylaws.
We are authorized to issue up to 150,000,000 shares of Class A common stock,
par value $.01 per share, 10,000,000 shares of Class B common stock, par value
$.01 per share, and 60,000,000 shares of preferred stock, par value $.01 per
share.
24
Common stock
As of February 28, 2001, we had approximately 70,851,123 shares of Class A
common stock outstanding held of record by approximately 382 stockholders and
10,000,000 shares of Class B common stock outstanding held entirely by Gerald
Gorman, our Chairman.
All of the issued and outstanding shares of our Class A common stock are
fully paid and nonassessable. Except as described below, the issued and
outstanding shares of our Class A common stock and Class B common stock
generally have identical rights. In addition, under our amended and restated
certificate of incorporation, as amended, holders of Class A common stock have
no preemptive or other subscription rights to purchase shares of our stock, nor
are they entitled to the benefits of any redemption or sinking fund provisions.
Voting rights
The holders of our Class A common stock are entitled to one vote per share
on all matters to be voted on by stockholders generally, including the election
of directors. The holder of our Class B common stock is entitled to ten votes
per share on all matters to be voted on by stockholders generally, including the
election of directors. In addition to any class vote that may be required under
law or our amended and restated certificate of incorporation, as amended, all
classes of capital stock entitled to vote generally on any matter vote together
as a single class. There are no cumulative voting rights. Accordingly, holders
of a majority of the total votes entitled to vote in an election of directors
will be able to elect all of the directors standing for election.
Please see "Risk Factors - Gerald Gorman controls EasyLink Services and will
be able to prevent a change of control."
Liquidation preferences
If we are liquidated, dissolved or wound up, the holders of our Class A
common stock and Class B common stock will be entitled to receive distributions
only after satisfaction of all liabilities and the prior rights of any
outstanding class of preferred stock. If we are liquidated, dissolved or wound
up, our assets legally available after satisfaction of all of our liabilities
shall be distributed to the holders of our Class A common stock and Class B
common stock pro rata based on the respective numbers of shares of Class A
common stock held by these holders or issuable to them upon conversion of Class
B common stock.
Conversion rights/mandatory conversion
Holders of our Class A common stock have no conversion rights. Holders of
our Class B common stock may convert each share into one share of Class A common
stock. In addition, the holder of Class B common stock has contractually agreed
with the former holders of Class C preferred stock and Class E preferred stock
and some former holders of Class A preferred stock that he will not transfer his
shares of Class B common stock in the form of Class B common stock unless such
holders have had the opportunity within specified time periods to dispose of
their shares of Class A common stock issuable upon conversion of their preferred
stock at specified prices. As a result, until this condition has been satisfied
or the former holders of a majority in interest of each class of preferred stock
otherwise consent in writing, the holder of Class B common stock must convert
shares of Class B common stock into shares of Class A common stock prior to
transfer.
25
Dividends
The holders of both classes of our common stock are entitled to receive
equal non-cumulative dividends when and as declared from time to time by the
board of directors, subject to any preferential dividend rights of any
outstanding preferred stock.
Preferred stock
Under our amended and restated certificate of incorporation, as amended, the
board of directors is authorized, without further stockholder approval, to issue
up to 60,000,000 shares of preferred stock in one or more classes or series. The
board also has the authority to fix or alter the designations, preferences,
rights and any qualifications, limitations or restrictions of the shares of each
such class or series, including dividend rights, conversion rights, voting
rights, terms of redemption and liquidation preferences. Preferred stock could
thus be issued quickly with terms that could delay or prevent a change of
control of EasyLink Services or make removal of management more difficult.
Additionally, the issuance of preferred stock may decrease the market price of
our Class A common stock and may adversely affect the voting and other rights of
the holders of our Class A common stock. Currently, we do not have any preferred
stock outstanding and have no plans to create or issue any shares of any new
class or series of preferred stock.
Anti-takeover effects of certain provisions of Delaware law and our amended and
restated certificate of incorporation, as amended, and bylaws
We are subject to the provisions of Section 203 of the General Corporation
Law of the State of Delaware. Generally, Section 203 prohibits a publicly-held
Delaware corporation from engaging in a "business combination" with an
"interested stockholder" for a period of three years after the time of the
transaction in which the person became an interested stockholder, unless the
interested stockholder attained that status with the approval of the board of
directors or unless the business combination is approved in a prescribed manner.
A "business combination" includes mergers, asset sales and other transactions
resulting in a financial benefit to the interested stockholder. Generally, an
"interested stockholder" is a person who, together with affiliates and
associates, owns, or within three years did own, 15% or more of a corporation's
voting stock. This statute could prohibit or delay the accomplishment of mergers
or other takeovers or changes in control with respect to EasyLink Services and,
accordingly, may discourage attempts to acquire EasyLink Services.
In addition, provisions of the amended and restated certificate, as amended,
and bylaws, which provisions are summarized in the following paragraphs, may be
deemed to have an anti-takeover effect. These provisions may delay, defer or
prevent a tender offer or takeover attempt that a stockholder might consider to
be in its best interests, including those attempts that might result in a
premium over the market price for the shares held by stockholders.
Board of Directors vacancies. Our bylaws authorize the board of directors to
fill vacant directorships or increase the size of the board of directors. This
may prevent a stockholder from removing incumbent directors and simultaneously
gaining control of the board of directors by filling the resulting vacancies
created by such removal with its own nominees.
Special meetings of stockholders. Our bylaws provide that special meetings
of stockholders of EasyLink Services may be called at any time by the Chairman
of the board, the Vice Chairman of the board, if any, the President, if any, or
the board of directors. Written notice of the meeting must be given not less
than 10 nor more than 60 days before the date of the meeting.
26
Authorized but unissued shares. The authorized but unissued shares of our
common stock and preferred stock are available for future issuance without
stockholder approval, subject to the limitations imposed by The Nasdaq National
Market. These additional shares may be utilized for a variety of corporate
purposes, including future public offerings to raise additional capital,
corporate acquisitions and employee benefit plans. The existence of authorized
but unissued and unreserved common stock and preferred stock could render more
difficult or discourage an attempt to obtain control of EasyLink Services by
means of a proxy contest, tender offer, merger or otherwise.
The General Corporation Law of the State of Delaware provides generally
that, in addition to the approval of the board of directors, the affirmative
vote of a majority of the shares entitled to vote on any matter is required to
amend a corporation's certificate of incorporation unless a corporation's
certificate of incorporation requires a greater percentage.
Transfer agent and registrar
The transfer agent and registrar for our Class A common stock is American
Stock Transfer and Trust Company.
27
SELLING STOCKHOLDERS
The table below sets forth information with respect to the beneficial
ownership of our Class A common stock by the selling stockholders immediately
prior to this offering and as adjusted to reflect the sale of shares of our
Class A common stock in the offering. All information with respect to the
beneficial ownership has been furnished by the respective selling stockholders.
Percentages are based on the 80,851,123 shares of Class A common stock and Class
B common stock outstanding on February 28, 2001.
Holders of Senior Convertible Notes
Number of
Shares Percentage
Number of Offered by Number of of Shares to
Shares this Shares to be be Held
Beneficially Prospectus Held After After
Selling Stockholder Owned(1) (1)(2) Offering Offering(3)
------------------- -------- ------------ ----------- ------------
Federal Partners, L.P. (4) 9,756,944(5) 9,756,944 0 *
Public Employee Retirement System of Idaho 2,259,569 2,259,569 0 *
City of Milford Pension & Retirement Fund 645,492 645,492 0 *
Morgan Trust Co.of the Bahamas Ltd. as 430,361 430,361 0 *
Trustee U/A/D 11/30/93
Wells Family LLC 430,333 430,333 0 *
Albert L. Zesiger 392,665 392,665 0 *
Roanoke College 322,764 322,764 0 *
Domenic J. Mizio 322,764 322,764 0 *
NFIB Corporate Account 269,063 269,063 0 *
City of Stamford Firemen's Pension Fund 268,951 268,951 0 *
Barrie Ramsay Zesiger 268,951 268,951 0 *
Wolfson Investment Partners LP 215,167 215,167 0 *
Dean Witter Foundation 215,167 215,167 0 *
National Federation of Independent 215,139 215,139 0 *
Business Employee Pension Trust
The Jenifer Altman Foundation 188,260 188,260 0 *
Theeuwes Family Trust, Felix Theeuwes Trustee 161,382 161,382 0 *
Susan Uris Halpern 161,382 161,382 0 *
Andrew Heiskell 161,354 161,354 0 *
Meehan Foundation 118,388 118,388 0 *
The Meehan Investment Partnership I, L.P. 107,597 107,597 0 *
Murray Capital, LLC 107,597 107,597 0 *
Mary C. Anderson 107,597 107,597 0 *
Butler Family LLC 107,569 107,569 0 *
William B. Lazar 80,691 80,691 0 *
Psychology Associates 80,691 80,691 0 *
Peter Looram 80,691 80,691 0 *
Nicola Zesiger Mullen 80,691 80,691 0 *
Lazar Foundation 80,691 80,691 0 *
Jeanne L. Morency 80,691 80,691 0 *
Helen Hunt 80,691 80,691 0 *
HBL Charitable Unitrust 80,691 80,691 0 *
David Zesiger 80,691 80,691 0 *
Asphalt Green, Inc. 80,691 80,691 0 *
Alexa Zesiger Carver 80,691 80,691 0 *
A. Carey Zesiger 80,691 80,691 0 *
Leonard Kingsley 53,813 53,813 0 *
Donald and Dan-Thanh Devivo 26,892 26,892 0 *
John J. & Catherine H. Kayola 16,138 16,138 0 *
28
Number of
Shares Percentage
Number of Offered by Number of of Shares to
Shares this Shares to be be Held
Beneficially Prospectus Held After After
Selling Stockholder Owned(1) (1)(2) Offering Offering(3)
------------------- -------- ------------ ----------- ------------
Mary I. Estabil 10,763 10,763 0 *
James F. Cleary 10,763 10,763 0 *
Frederick Landman 1,152,500 1,152,500 0 *
The Waterproof Partnership, L.P. 287,847 287,847 0 *
Sapient Corporation 57,625 57,625 0 *
Peoples Benefit Life Insurance Co. 223,529 223,529 0 *
(Teamsters Separate Account)
Peoples Benefit Life Insurance Company 248,365 248,365 0 *
Retail Clerks Pension Trust #2 745,096 745,096 0 *
St. Albans Partners Ltd. 745,096 745,096 0 *
Yield Strategies Fund I, L.P. 496,731 496,731 0 *
Bank Of America Pension Plan 794,769 794,769 0 *
Circlet (IMA) Limited 741,371 741,371 0 *
General Motors Welfare Benefit Trust (ST-VEBA) 156,470 156,470 0 *
Newberg Family Trust 124,183 124,183 0 *
Woodmont Investments Limited 124,183 124,183 0 *
JMG Capital Partners, L.P. 1,988,910 1,988,910 0 *
JMG Triton Offshore Fund Limited 3,292,580 3,292,580 0 *
Deutsche Banc Alex. Brown Inc. 184,500 184,500 0 *
Deutsche Bank AG, London Branch 599,625 599,625 0 *
The Common Fund F/A/O Absolute Return Fund 71,033 71,033 0 *
Helix Convertible Opportunities Fund, Ltd. 250,920 250,920 0 *
Helix Convertible Opportunities, L.P. 323,798 323,798 0 *
BNP Cooper Neff Convertible Strategies Fund, L.P. 56,457 56,457 0 *
BNP Paribas Equity Strategies, S.N.C 847,593 847,593 0 *
J. N. Industries Inc. 76,577(6) 73,800 2,777 *
Merced Partners Limited Partnership 461,250 461,250 0 *
Fir Tree Institutional Value Fund, L.P. 1,172,228 1,172,228 0 *
Fir Tree Recovery Master Fund, L.P. 215,493 215,493 0 *
Fir Tree Value Fund, L.P. 2,963,703 2,963,703 0 *
Fir Tree Value Partners, LDC 254,740 254,740 0 *
Other Holders
Number of
Shares Percentage
Number of Offered by Number of of Shares to
Shares this Shares to be be Held
Beneficially Prospectus Held After After
Selling Stockholder Owned (2) Offering Offering
------------------- -------- ----------- ----------- ------------
Bantu, Inc. (7) 445,744 445,744 0 *
3Cube, Inc. (8) 144,632 64,549 80,083 *
STD, Inc. (9) 185,686 185,686 0 *
Edd Helms Group, Inc. (10) 13,750 13,750 0 *
Madison Avenue Technology Group, Inc.(11) 102,215 102,215 0 *
SG Cowen Securities Corporation(12) 317,460 317,460 0 *
Aligned Investments Limited(13) 781,639 211,041 570,598 *
K. Digvijay Sing(14) 75,900(15) 75,900 0 *
Arvindra Kanwal(16) 30,000(15) 30,000 0 *
Sandeep Dalal(17) 38,125(15) 38,125 0 *
James Ting(18) 1,372,465(15) 1,134,583 237,882 *
Robert Tsang(18) 618,200(15) 486,250 131,950 *
Prasad Investment (19) 261,333(20) 261,333 0 *
Chung Yuen "Allan" Kwan (21) 582,633 47,856 534,777 *
Po Ling "Clara" Shiu(22) 14,040 8,827 5,213 *
Wai Ming Chu(22) 10,038 10,038 0 *
Tyson Li(22) 30,970 30,970 0 *
29
Number of
Shares Percentage
Number of Offered by Number of of Shares to
Shares this Shares to be be Held
Beneficially Prospectus Held After After
Selling Stockholder Owned (2) Offering Offering
------------------- -------- ----------- ----------- ------------
Sing Keung Lam(22) 56,421 42,743 13,678 *
Yin Nei Kwok(22) 3,049 3,049 0 *
Ming Fat Lam(22) 4,404 4,404 0 *
Alexandra Rehak(22) 16,489 16,489 0 *
Dee Han "Lanna" Ng(22) 7,498 7,498 0 *
Chi Feng Sze(22) 10,585 10,585 0 *
Albert Lam(22) 63,689 63,689 0 *
David Yen(23) 430,074 19,868 410,206 *
Brent Lee(22) 15,388 15,388 0 *
Li Wang(22) 9,930 9,930 0 *
Frank Meng(22) 38,389 38,389 0 *
Hua "Catherine" Cao(22) 16,241 16,241 0 *
Michael Hiu(22) 1,048 1,048 0 *
Donald Ee(22) 24,511 24,511 0 *
Kee Hong Lu(22) 969 969 0 *
Liang-Chao Chai(22) 45,811 32,133 13,678 *
Shu-Hui Liu(22) 4,954 4,954 0 *
Tiffany Chang(22) 7,527 7,527 0 *
Chun-Yuan Yeh(22) 11,259 2,925 8,334 *
Po-Yu Liu (22) 6,799 1,935 4,864 *
Tsung Hsi Lee(22) 3,502 1,759 1,743 *
Yi-Nan Tsai(22) 3,906 3,383 523 *
Yu-Chun Hsiao(22) 1,772 1,772 0 *
Chia-Yung Chou (22) 2,475 1,952 523 *
Yueh-Fong Hsieh (22) 2,335 1,482 853 *
Kuo-Hsiang Chang (22) 1,980 1,980 0 *
Pao Lung Chang(22) 26 26 0 *
Pei-Chen "Teresa" Lin(22) 1,614 1,614 0 *
Yi-Hsuan Lin(22) 1,745 1,745 0 *
Ya-Ling Yeh(22) 3,251 3,251 0 *
Yu-Chien Jeng(22) 1,152 1,152 0 *
Ching-Yi Chen(22) 1,887 1,887 0 *
Yi-Yi Tsung(22) 1,489 1,489 0 *
Hsin-Ying Chen(22) 1,113 1,113 0 *
I-Hung Lin(22) 2,432 2,432 0 *
Ren-Rung Iau(22) 123 123 0 *
Chih-Hao Chen(22) 369 369 0 *
Pei-Chun Lin(22) 1,277 1,277 0 *
Wu-Chuan Chen(22) 4,303 4,303 0 *
Hsiu-Ru Ko (22) 1,639 1,639 0 *
Chen-Ching Wang(22) 3,850 3,850 0 *
Yuan Shun Sun(22) 3,110 3,110 0 *
Li-Fang Lin(22) 1,423 1,423 0 *
Tsan-Hsien Yang(22) 1,605 1,605 0 *
Yu-Shyan Chiu(22) 1,113 1,113 0 *
Vigers Design(24) 5,191 5,191 0 *
Tactics Communication(24) 5,114 5,114 0 *
Charles Chu, Kenneth Sit & Wu(24) 4,894 4,894 0 *
Siao, Wen and Leung(24) 1,110 1,110 0 *
Chen & Lin Attorney at Law(24) 3,040 3,040 0 *
Vignette Asia Pte Ltd. 16,888 16,888 0 *
---------
* Less than one percent
(1) Except as otherwise disclosed in other footnotes below, the number of
shares beneficially owned by the holders of senior convertible notes
represents shares issuable upon conversion of our Senior Convertible
Notes or mandatorily issuable in payment of a portion of the interest
on our Senior Convertible Notes. The conversion price is subject to
adjustment and, as a result, the number of shares may increase.
30
(2) This prospectus also covers any additional shares of Class A common
stock that become issuable as a result of a stock split, stock dividend
or similar transaction that results in an increase in the number of our
outstanding shares of common stock.
(3) In accordance with the rules of the SEC, the percentage of Class A
common stock outstanding owned by each selling stockholder is
calculated as follows: (a) the numerator is the number of shares of
Class A common stock held by that selling stockholder upon conversion
of all Senior Convertible Notes owned by that selling stockholder and
(b) the denominator includes the number of shares of Class A common
stock and Class B common stock outstanding and the number of shares of
Class A common stock held by that selling securityholder upon
conversion of all notes owned by that selling securityholder.
(4) Stephen Duff, a director of EasyLink Services, is Treasurer and a
limited partner of Federal Partners, L.P. Mr. Duff is also the Senior
Investment Manager of The Clark Estates, Inc. The Clark Estates, Inc.
provides management and administrative services to Federal Partners.
(5) Includes 3,000,000 shares of our Class A common stock and an additional
1,000,000 shares of Class A Common Stock we committed to issue to
Federal Partners if the closing price of our Class A Common Stock on
the principal securities exchange on which they are traded is not at or
above $10 per share for 5 consecutive days on or before December 31,
2001. Excludes 1,943,800 shares of Class A common stock not being sold
pursuant to this prospectus that are held by accounts for which The
Clark Estates, Inc. provides management and administrative services.
(6) Includes 2,777 shares of our Class A common stock held by J.N.
Industries.
(7) Concurrently with our investment in Bantu, we purchased source code and
entered into a related development agreement
(8) We have received a technology license from 3Cube, Inc. that allows us
to offer Web-based and email to fax services across our network of Web
sites and ISP partners and our business customers.
(9) Doing business as Software Tool and Die. Barry Shein, President of STD,
is an advisor to our board of directors and we have entered into an
indemnification agreement with him to indemnify him from liabilities
arising out of his capacity as an advisor.
(10) In 2000, we purchased phone number from Edd Helms Group, Inc.
(11) In July 2000, we entered into a preferred list hosting agreement with
Madison Avenue Technology Group that appointed us as a preferred
reseller of CheetahMail's list host management services.
(12) SG Cowen Securities Corporation acted as an underwriter in connection
with our initial public offering in June 1999, as an initial purchaser
in connection with the issuance of our 7% convertible subordinated
debentures in January 2000 and as our financial advisor in connection
with the sale of our advertising network business completed in March
2001.
(13) Aligned Investments was a principal stockholder of Huelink Corporation
Limited, which was acquired by our majority-owned subsidiary Asia.com,
Inc. on June 1, 2000. Allen Huie, the principal stockholder of Aligned
Investments became a director of Asia.com, Inc. upon the acquisition of
Huelink Corporation Limited.
(14) Former director and chief executive officer of India.com, Inc., a
majority-owned subsidiary of EasyLink Services.
(15) Excludes shares issuable upon the exercise of employee stock options.
(16) Former President - Content of India.com, Inc., a majority-owned
subsidiary of EasyLink Services.
(17) Former President - U.S. Operations and Alliances and Acquisitions of
India.com, Inc., a majority-owned subsidiary of EasyLink Services.
(18) Former shareholder of TCom, Inc. EasyLink Services acquired TCom on
October 18, 1999 in a merger. Since the merger, this selling
stockholder has been employed by EasyLink Services in various
capacities.
(19) Prasad Investment sold MyIndia.com Inc. to our majority-owned
subsidiary India.com, Inc. in February 2001.
(20) Includes 65,333 potentially issuable as contingent payments in
connection with the acquisition described in footnote 19 above.
(21) Chief executive officer and director of our majority-owned subsidiary
Asia.com, Inc. Mr. Kwan was an indirect principal stockholder of
Huelink Corporation Limited, which was acquired by our majority-owned
subsidiary Asia.com, Inc. on June 1, 2000.
(22) Former employee of a subsidiary of Asia.com, Inc., a majority-owned
subsidiary of EasyLink Services.
(23) Former employee of a subsidiary of Asia.com, Inc., a majority-owned
subsidiary of EasyLink Services. Mr. Yen was an indirect principal
stockholder of Huelink Corporation Limited, which was acquired by our
majority-owned subsidiary Asia.com, Inc. on June 1, 2000.
(24) Former vendor of a subsidiary of Asia.com, Inc., a majority-owned
subsidiary of EasyLink Services.
31
PLAN OF DISTRIBUTION
The selling stockholders may offer and sell the Class A common stock covered
by this prospectus from time to time. The selling stockholders' pledgees,
donees, transferees or other successors in interest that receive such Class A
common stock as a gift, partnership distribution or other non-sale related
transfer may likewise offer and sell Class A common stock from time to time. The
selling stockholders will act independently of us in making decisions with
respect to the timing, manner and size of each sale. The selling stockholders
may sell the Class A common stock on one or more exchanges, including the Nasdaq
National Market, or in the over-the-counter market or otherwise, at prices and
at terms then prevailing or at prices related to the then current market prices
or in negotiated transactions.
The selling stockholders may sell the Class A common stock by one or more of
the following means of distribution:
o a block trade in which the broker-dealer so engaged will attempt to
sell the shares as agent, but may purchase and resell a portion of the
block as principal to facilitate the transaction;
o purchases by a broker-dealer as principal and resale by such
broker-dealer for its own account pursuant to this prospectus; and
o ordinary brokerage transactions and transactions in which the broker
solicits purchasers.
We may amend this prospectus from time to time to describe a specific plan
of distribution. In connection with distributions of the Class A common stock or
otherwise, the selling stockholders may enter into hedging transactions with
broker-dealers or other financial institutions. In connection with such
transactions, broker-dealers or other financial institutions may engage in short
sales of our Class A common stock in the course of hedging the positions they
assume with the selling stockholders. The selling stockholders may also sell our
Class A common stock short and redeliver the shares covered by this prospectus
to close out such short positions. The selling stockholders may also enter into
option or other transactions with broker-dealers or other financial institutions
which require the delivery to such broker-dealer or other financial institution
of the Class A common stock offered under this prospectus, which Class A common
stock such broker-dealer or other financial institution may resell pursuant to
this prospectus (as supplemented or amended to reflect such transaction). The
selling stockholders may also pledge the shares of Class A common stock
registered hereunder to a broker-dealer or other financial institution and, upon
a default, such broker-dealer or other financial institution may effect sales of
the pledged Class A common stock pursuant to this prospectus (as supplemented or
amended to reflect such transaction). In addition, the selling stockholders may
also sell the Class A common stock under Rule 144 rather than pursuant to this
prospectus if the shares so qualify for resale under Rule 144.
In effecting sales, brokers, dealers or agents engaged by the selling
stockholders may arrange for other brokers or dealers to participate. Brokers,
dealers or agents may receive commissions, discounts or concessions from the
selling stockholders in amounts to be negotiated prior to the sale. Such brokers
or dealers and any other participating brokers or dealers may be deemed to be
"underwriters" within the meaning of the Securities Act in connection with such
sales, and any such commission, discount or concession may be deemed to be
underwriting discounts or commissions under the Securities Act. We will pay all
expenses incident to the offering and sale of the Class A common stock covered
by this prospectus to the public other than any commissions and discounts of
underwriters, dealers or agents and any transfer taxes. In the case of sales by
STD, Inc., we will pay any commissions and discounts of underwriters, dealers or
agents if the average sales price of the shares sold by STD, Inc. is below
$16.00 per share.
32
In order to comply with the securities laws of certain states, if
applicable, the Class A common stock will be sold in such jurisdictions only
through registered or licensed brokers or dealers. In addition, in certain
states the Class A common stock may not be sold unless they have been registered
or qualified for sale in the applicable state or an exemption from the
registration or qualification requirement is available and is complied with.
Under applicable rules and regulations under the Exchange Act, any person
engaged in a distribution of the shares may not simultaneously engage in
market-making activities with respect to our common stock for the applicable
period under Regulation M of the Exchange Act prior to the commencement of such
distribution. In addition and without limiting the foregoing, the selling
stockholders will be subject to applicable provisions of the Exchange Act and
the rules and regulations thereunder, including, without limitation, Regulation
M, which provisions may limit the timing of purchases and sales of the shares by
the selling stockholders. All of the foregoing may affect the marketability of
the shares.
No dealer, salesperson or other person is authorized to give any information
or to represent anything not contained or incorporated by reference in this
prospectus. You must not rely on any unauthorized information or
representations. This prospectus is an offer to sell only the shares offered by
this prospectus, but only under the circumstances and in jurisdictions where it
is lawful to do so. The information contained in this prospectus is current only
as of its date.
LEGAL MATTERS
The validity of the Class A common stock offered in this prospectus has been
passed upon by David Ambrosia, our General Counsel. As of the date hereof, Mr.
Ambrosia owned 4,475 shares of our Class A common stock and held options to
purchase 308,030 shares of our Class A common stock.
EXPERTS
Our consolidated financial statements appearing in our Annual Report on Form
10-K for the year ended December 31, 2000, have been audited by KPMG LLP,
independent accountants, as set forth in their report thereon, incorporated
herein by reference. Such consolidated financial statements are incorporated by
reference in reliance upon such report given on the authority of such firm as
experts in accounting and auditing. The report of KPMG LLP covering the December
31, 2000 financial statements, dated February 15, 2001, contains an explanatory
paragraph that states that the Company has suffered recurring losses from
operations since inception and has a working capital deficiency that raise
substantial doubt about the entity's ability to continue as a going concern. The
consolidated financial statements do not include any adjustments that might
result from the outcome of that uncertainty.
The consolidated financial statements of The Allegro Group, Inc. appearing
in our Amendment to Current Report on Form 8-K/A, dated October 26, 1999 have
been audited by KPMG LLP, independent accountants, as set forth in their reports
thereon incorporated herein by reference. Such consolidated financial statements
are incorporated by reference in reliance upon such report given on the
authority of such firm as experts in accounting and auditing.
The consolidated financial statements of Asia.com, Inc. (formerly eLong.com,
Inc.) (a development stage enterprise) incorporated in this prospectus by
reference to our Amendment to Current Report on Form 8-K/A, dated May 26, 2000,
have been audited by KPMG, independent public accountants, as indicated in their
report with respect thereto and have been incorporated by reference herein in
reliance upon the authority of said firm as experts in accounting and auditing.
Our report dated May 24, 2000, contains an emphasis paragraph that states the
group's operations are subject to extensive regulation and supervision by the
33
People's Republic of China ("PRC") government. The laws and regulations
pertaining to Internet content provider businesses in the PRC are evolving and
may be subject to change.
The financial statements of NetMoves Corporation (formerly FaxSav
Incorporated) incorporated in this prospectus by reference to our Amendment to
Current Report on Form 8-K/A, dated April 24, 2000, have been so incorporated in
reliance on the report of PricewaterhouseCoopers LLP, independent accountants,
given on the authority of said firm as experts in auditing and accounting.
34
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
Registration fee $ 6,355
Accounting fees and expenses 15,000
Legal fees and expenses 0
Miscellaneous expenses 1,100
-------
Total: $22,355
Item 15. Indemnification of Directors and Officers.
Section 145 of Delaware General Corporation Law empowers the Company to
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit, or proceeding, whether
civil, criminal, administrative or investigative (other than an action by or in
the right of the corporation) by reason of the fact that such person is or was a
director, officer, employee or agent of the corporation or is or was serving at
the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorney's fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by such person in connection with
such action, suit or proceeding if such person acted in good faith and in a
manner such person reasonably believed to be in or not opposed to the best
interests of the corporation, and with respect to any criminal action or
proceeding, had no reasonable cause to believe that such person's conduct was
unlawful. The termination of any cause of action, suit or proceeding by
judgment, order, settlement, conviction, or upon plea of nolo contendre or its
equivalent, does not, of itself, create a presumption that such person did not
act in good faith and in a manner that such person reasonably believed to be in
or not opposed to the best interests of the corporation, and, with respect to
any criminal action or proceeding, had reasonable cause to believe that such
person's conduct was unlawful.
As permitted by Section 145 of the Delaware General Corporation Law, the
registrant's amended and restated certificate of incorporation, as amended
provides that a director of the Company will not be personally liable to the
Company or its stockholders for monetary damages for breach of fiduciary duty as
a director, except for any breach of the director's duty of loyalty to the
Company or its stockholders; for acts or omissions not in good faith or that
involve intentional misconduct or a knowing violation of law; for the unlawful
payment of dividends or unlawful stock repurchases under Section 174 of the
Delaware General Corporation Law; or for any transaction from which the director
derived an improper personal benefit.
The bylaws of the Company provide that the Company shall indemnify
directors, officers and employees for such liabilities in such manner, under
such circumstances and to such extent as permitted by Section 145 of the
Delaware General Corporation Law, as now enacted or hereafter amended and that
the Company shall advance all reasonable costs and expenses (including
attorney's fees) incurred in defending any action, suit or proceeding to all
persons entitled to such indemnification, all in the manner, under the
circumstances and to the extent permitted by Section 145 of the Delaware General
Corporation Law, as now enacted or hereafter amended.
The Company has entered into indemnity agreements with each of its
directors and executive officers to give them additional contractual assurances
regarding the scope of the indemnification described above and to provide
additional procedural protections. In addition, the Company has obtained
II-1
directors' and officers' insurance providing indemnification for directors,
officers and key employees for various liabilities.
At present, there is no pending litigation or proceeding involving any
director, officer, employee or agent as to which indemnification will be
required or permitted under the certificate of incorporation. The registrant is
not aware of any threatened litigation or proceeding that may result in a claim
for such indemnification.
Item 16. Exhibits.
Exhibit No. Description
----------- -----------
5 Opinion of David W. Ambrosia.
23.1 Consent of KPMG LLP.
23.2 Consent of KPMG.
23.3 Consent of PricewaterhouseCoopers LLP.
23.4 Consent of David W. Ambrosia (included in Exhibit 5).
24 Power of Attorney (set forth on signature page hereof).
Item 17. Undertakings.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made of the securities registered hereby, a post-effective amendment to
this registration statement;
(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change
in the information set forth in this registration statement.
Notwithstanding the foregoing, any increase or decrease in volume
of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate,
the changes in volume and price represent no more than 20 percent
change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in this registration
statement; and
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in this
registration statement or any material change to such information
in this registration statement;
II-2
provided, however, that the undertakings set forth in paragraphs (i) and
(ii) above do not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic
reports filed with or furnished to the Commission by the registrant
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act
of 1934 that are incorporated by reference in this registration
statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered herein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
(d) The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of
prospectus filed as part of this Registration Statement in reliance upon
Rule 430A and contained in a form of prospectus filed by the Registrant
pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act
shall be deemed to be part of this Registration Statement as of the time
it was effective.
(2) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a
form of prospectus shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be initial bona fide offering
thereof.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Edison, State of New Jersey, on April 2, 2001.
EasyLink Services Corporation
By /s/ Thomas Murawski
-------------------------
Thomas Murawski
Chief Executive Officer
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POWER OF ATTORNEY
We, the undersigned officers and directors of EasyLink Services
Corporation, hereby severally and individually constitute and appoint Thomas
Murawski and David Ambrosia, and each of them, the true and lawful
attorneys-in-fact and agents of each of us to execute in the name, place and
stead of each of us (individually and in any capacity stated below) (1) any and
all amendments (including post-effective amendments) to this registration
statement, and to file the same, with all exhibits thereto, and other documents
or instruments necessary or advisable in connection therewith, and (2) a
registration statement, and any and all amendments thereto, relating to the
offering covered hereby filed pursuant to Rule 462(b) under the Securities Act
of 1933, with the Securities and Exchange Commission, each of said
attorneys-in-fact and agents to have the power to act with or without the others
and to have full power and authority to do and perform in the name and on behalf
of each of the undersigned every act whatsoever necessary or advisable to be
done in and about the premises, as fully to all intents and purposes as any of
the undersigned might or could do in person, and we hereby ratify and confirm
our signatures as they may be signed by our said attorneys-in-fact and agents or
each of them to any and all such amendments and instruments.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
NAME TITLE DATE
---- ----- ----
/s/ Thomas Murawski Chief Executive Officer and April 27, 2001
--------------------------- Director (principal executive
(Thomas Murawski) officer)
/s/ Gerald Gorman Chairman and Director April 27, 2001
---------------------------
(Gerald Gorman)
/s/ Gary Millin Director April 27, 2001
---------------------------
(Gary Millin)
/s/ Debra McClisiter Executive Vice President and April 27, 2001
--------------------------- Chief Financial Officer
(Debra McClister) (principal accounting and
financial officer)
/s/ George Abi Zeid Director April 27, 2001
---------------------------
(George Abi Zeid)
/s/ William Donaldson Director April 27, 2001
---------------------------
(William Donaldson)
/s/ Stephen Duff Director April 27, 2001
---------------------------
(Stephen Duff)
/s/ Stephen Ketchum Director April 27, 2001
---------------------------
(Stephen Ketchum)
/s/ Jack Kuehler Director April 27, 2001
---------------------------
(Jack Kuehler)
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EXHIBIT INDEX
Exhibit No. Description
----------- -----------
5 Opinion of David W. Ambrosia.
23.1 Consent of KPMG LLP.
23.2 Consent of KPMG.
23.3 Consent of PricewaterhouseCoopers LLP.
23.4 Consent of David W. Ambrosia (included in Exhibit 5).
24 Power of Attorney (set forth on signature page hereof).